An overlook on steel market: general observations about 2019 performance

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How was steel market in 2019? It’s time for an assessment…

Whenever we talk about global economy, especially referred to the latest years, we must be aware that we cannot count on certain and long-lasting data; on the contrary, we have to keep into consideration the continuous ups and downs of the market. This obviously involves risky decisions that have a consequence on the balance of a company. The perfect scenery would be that of a stable economy, based on forward-looking polices and definite and durable trade agreements that could let you plan your actions in advance and foresee the results of your actions.


Today’s situation and the uncertainty of iron and steel industry

Today’s situation of the metallurgic industry, as well as that of other fields, is based on an uncertainty feeling due to an international politics that has become extremely protectionist and worsened by export duties. As a result, we had to take note of a general revenues decrease and demand impasse. Iron and steel industry has closed 2018 with a comeback of 4,6%. But in the first six months of 2019 there has been a light decline (4,5%), even if the greatest problem is that there is an uneven growth in several countries: Japan (-5%) and European Union (-0,3%) are going down, while China produces the half of the steel produced worldwide (+9,9%); Russia, with a growth of 1% isn’t able to increase the East Europe market and the USA still maintain 2018 levels regardless of the fact that steel price has reduced. Coming back to the European situation, we have to say that the new system of shares for steel import has influenced negatively the already uncertain economic situation. Though Germany is still the first steel producer in Europe, in the course of 2018 it has registered a decrease of -2%.

Italy, USA and India. Demand decrease and its consequences

Concerning the USA we observe a market based on a consistent decrease of steel prices, decrease of demand and short time delivery. The decrease of prices interests nearly all products, contrary to the European market where prices are near production costs, and is due to the drastic drop of the demand. Just think that at the end of 2018 prices in the USA were just lightly above the level planned in 232 Section of rates. Import, historically a very important part of American trade, were also decreasing in the half of 2018; nevertheless, according to recent forecasts for the future, as soon as prices reach the minimum level, import will reduce as a consequence, supporting a partial recovery of prices within the end of summer or the beginning of autumn. Indian market is not living a better condition. Small and medium-sized factories are reducing production because of the decreased demand of internal market. Some very important plants such as BMM Ispat, Rayen Steel, PGM Ferro Steel and others, had to halve their production and have already declared that in case there is not a recovery, other reductions may be necessary. The only company who seems to have an optimistic idea of the future is Tata SteelNSE, that trusts into a recovery of the demand in the short term and hasn’t planned a reduction of its production.  On the other hand, some other large companies think they can  balance out the decrease of local demand (more important during the rainy season) through storage management and finding new export destinations. Though the situation is extremely unstable and unsure, a large part of the Indian market has an optimistic vision of the future.

Italian metallurgic industry since 2012 has witnessed an important decrease of demand, since internal market isn’t able to consume all the steel produced while, on the other hand, hasn’t developed a strong position in the export yet. Regardless the crisis and the difficulties in operating in such a complex market, at Metallurgica Veneta, we keep on managing our company according to principles of quality of both products and services, adjusting our offer depending on customers’ needs and optimizing production and delivery timing. For any request or quote, contact us by writing to info@metallurgicaveneta.it or calling  +39 0444 436321, we will be glad to be at your disposal.